FAIR OR FOUL?

December 10, 2007

Among the questions asked were what is expected for sales, salaries, and staffing for 2008.

Key Points

Fair or Foulby Judy Chi

Community pharmacists can expect problems on their hands over average manufacturer price (AMP) at the start of the year, followed by the need for tamper-resistant Rx pads in April. For hospital R.Ph.s, they have to guard against hospital-acquired infections, since Medicare won't be paying for the care associated with HAIs next year. Both community and hospital pharmacists can look forward to a knockdown, drag-out Presidential race in November that could determine how health care is provided in the future.

Optimism reigns for community pharmacistsby Reid Paul

How optimistic are pharmacists? When asked what kind of business year they were expecting for 2008, 80% of the 460 respondents indicated that it was good, very good, or excellent. That figure represents a 15% jump over last year's figures, reversing a five-year downward trend. Not since 2002 have R.Ph.s expressed that level of optimism. Interestingly, while only 65% of pharmacists surveyed last year expected a good, very good, or excellent year for 2007, in the current survey, 74% reported that this year will actually be good or very good, and another 10% expect this to be an excellent year.

A profitable year

Undoubtedly higher Rx volume plays an important role in the overall optimism and pharmacists are expecting a healthy growth in sales for next year. More than half of all respondents-59% in fact-predict that sales will increase in 2008 by an average of 10%. In addition, 67% of respondents predict that operating expenses will rise.

The optimism and improved profits came despite a sense of increased competition. While last year Medicare Part D topped the list of worries, this year's focus turned to increased competition from big box and supermarket pharmacies offering discounted generics. When Kmart first introduced its discounted generic plan last year-followed shortly thereafter by Wal-Mart's own plan-it set in motion an increasingly competitive market, with chains and big box pharmacies offering steeply discounted and even free generic medications.

Although cash customers make up only 10% of the business for most pharmacies, it is clear that the discounted generic movement is having an impact. Respondents pegged the discounted generics as their top concern, with 33% of respondents indicating that it was a negative factor impacting their company, followed by Medicare Part D (32%) and the move of some cough and cold medicines behind the counter (19%).

A nuanced view of Medicare Part D

Now that Medicare Part D has moved out of the initial shock-and-awe phase, pharmacies are beginning to get a better grip on its true impact. Nevertheless, Part D was the top news item for 2007, with 28% of respondents selecting it as the top story, followed by the release of the AMP rule (17%), the drug error TV exposé on "20/20" (10%), and the growth of in-store clinics (9%).

While the Presidential election is less than a year away and will certainly be a top news story for 2008, many pharmacists are ambivalent about how important it will be for pharmacists. Forty-three percent of respondents indicated that they did not expect the new President to have an impact, while 25% said that they did. The remaining 31% were unsure of the impact. Still some respondents hoped that "the elections will focus on the healthcare issues and, thus, will impact the delivery of health care."

Respondents were more comfortable commenting on the importance of specific government programs. When asked specifically about how Part D was impacting their business, 28% of respondents indicated it had a positive impact on their pharmacy, while 37% felt it had a negative impact. The remaining 35% did not know what impact the program has had on their pharmacy. In comparison, last year, 55% of respondents felt the impact was negative, while only 24% saw it as a positive. As one respondent this year noted, "Part D had a dual effect. First, it created severe problems with reduced cash flow and lower profit margins, but it increased the volume of business and helped many patients take medications that they previously were not taking because of cost. Many patients qualified for additional help with their prescriptions and had no help previously."

One of the promising aspects of the Part D program has been the increased opportunity to deliver medication therapy management services to patients. Drug Topics' survey found that 34% of community pharmacists reported they are providing MTM services, although only 18% were actually reimbursed for it.